If it needs to be said, chances are Peter Schiff is going to say it.
The outspoken head of Euro Pacific Capital is at it again, noting that a currency war is unlike a conventional war in that “the objective is to kill yourself.”
Which is a problem, since one is currently being waged, he says. Schiff told The Breakout on Tuesday that although he thinks the United States is in position to win this particular conflict “in a big way,” it’s a pyrrhic victory due to the self-inflicted damage it would cause.
The website notes the reason countries are debasing their currencies is because it inflates corporate profits and makes it cheaper to pay back debts.
“The U.S., having borrowed trillions, prefers to pay those debts back using less valuable (debased) money,” it adds. “The lenders don’t like it, but for the borrowers, a currency falling in value is like newfound money. At least for a while.”
As the old adage goes, there is no free lunch. The price the U.S. pays for this currency debasement is that it amounts to a transfer of wealth from loaners to borrowers not just on an international level but also locally, The Breakout notes. Even minuscule inflation is losing out to many government securities favored by ultraconservative, generally aging investors.